The most powerful man in Iran avoids the gilded trappings of office. While many of the officials who serve under him build Caspian Sea villas and travel in caravans of shiny new SUVs, Ayatullah Ali Khamenei, the country's supreme religious leader, conducts himself with the modesty of a small-town mullah. He receives visitors in spare, undecorated offices in downtown Tehran and often runs meetings seated on the floor and wearing a plain black robe. Billboards with his portrait are ubiquitous in the capital, depicting Khamenei more as a rumpled civil servant than a revolutionary, with thick glasses and rough, checkered scarf. "When you talk to him, you feel you're dealing with a worldly man," says a senior Iranian official. "And everything is in his hands, now more than ever."
To much of the outside world, the dominant face of the Iranian regime is that of its President, Mahmoud Ahmadinejad, who since his election last June has set off reverberations by threatening Israel, questioning the Holocaust and defying demands that Tehran halt its suspected quest for nuclear weapons. Ahmadinejad's excesses have raised anxieties that he may someday draw the country into war with its longtime adversary, the U.S. But for all the bluster, Ahmadinejad's powers are constrained. The legal structure of the Islamic Republic places ultimate political authority in Khamenei, 66, who became Iran's religious leader in 1989 after the death of Ayatullah Ruhollah Khomeini. Because the Iranian Constitution grants the Supreme Leader veto power over the President's decisions, it is Khamenei who has the final say in high matters of state. As a result, the low-profile cleric--he shuns interviews with journalists--is the figure who will probably determine whether the nuclear dispute is resolved peacefully or hurtles Iran toward a confrontation with the U.S. and its allies.
Those who know Khamenei say he believes in Iran's right to nuclear power but also wants to avoid punishments that could cripple Iran and shake the theocratic regime's hold on power. "He's pragmatic, and in the end he makes decisions based on national interest," says a high-ranking official close to Khamenei. "He may well be the way out of this current impasse."
Khamenei's pragmatism may explain why the regime is now showing more willingness to negotiate than it has in months. A Western diplomat and Iran expert believes that Khamenei "definitely" had a hand in Ahmadinejad's letter to U.S. President George W. Bush last month, the first effort at a direct high-level contact between the two countries since 1979. After the U.N. Security Council permanent five plus Germany and the E.U. presented Tehran with a package of incentives aimed at persuading Iran to stop enriching uranium, Khamenei authorized the President to call the proposal a "positive step." Ahmadinejad said last week that Iran plans to respond to the West's offer by mid-August, but that's too slow for the Bush Administration, which wants an answer by the end of June. Analysts close to the regime say Khamenei may agree to suspend uranium enrichment for a fixed period but will quibble on specifics in hopes of prolonging talks and forestalling action by the U.N. Security Council. "Iran won't say no," says Saeed Laylaz, a former government official. "But it won't say yes immediately either. The answer is not going to fix anything in one go."